Carter v. Maryland Management Co

In Carter v. Maryland Management Co., 377 Md. 596, 835 A.2d 158 (2003), the Court of Appeals addressed whether a landlord participating in the Federal Low-Income Housing Tax Credit Program may use Maryland's tenant-holding-over statute to evict a tenant receiving low-income housing assistance under HUD's voucher program under 42 U.S.C. 1437f(o). 377 Md. at 598. Generally, the tenant-holding-over statute, Real Prop., 8-402, permits a landlord to recover possession of leased property upon finding that the tenant's lease has expired, that notice to quit was given, and that the tenant has refused to vacate. Id. at 598. At issue in Carter was a townhome, leased to Carter, in a project owned by Maryland Management Company as part of the "Section 8 Tenant-Based Assistance Rental Voucher Program." Id. at 599. In 2001, several years after certain federal regulations relating to the requirements for terminating leases under the voucher program were changed, Carter entered into a new lease with her landlord. That lease had a one-year lease term, which was renewable thereafter on a month-to-month basis. Id. at 600. Upon discovering that Carter had violated certain provisions of the lease agreement, the landlord sent Carter notice that it intended to terminate the lease. Id. at 601. When Carter failed to vacate the home, the landlord filed, in the District Court of Maryland, both a breach-of-lease action under Md. Code, Real Prop. 8-402.1 and a tenant-holding-over suit under Real Prop. 8-402. Id. at 602. After finding that there was good cause for termination of the lease and that Carter was, in fact, a tenant holding over, the District Court entered judgment in favor of the landlord under the tenant-holding-over statute. Id. Carter sought review of that decision by the Circuit Court for Baltimore City, contending that her lease term was indefinite and without any fixed term, that the tenant-holding-over statute was therefore inapplicable, and that her landlord, in any event, had failed to establish "good cause" to terminate her tenancy. Id. at 602. Finding no merit to either of these contentions, the circuit court affirmed, id. at 602, whereupon Carter petitioned the Court of Appeals for writ of certiorari, which that Court granted. While acknowledging that a landlord participating in the federal low-income tax credit program could "not terminate the tenancy of a low-income tenant other than for good cause," id. at 608, the Court of Appeals rejected the argument that the "good cause" termination requirement gave Carter "a right or entitlement to continued occupancy" of the housing unit and thereby "effectively converted a fixed lease term into an indefinite one that continues in existence and does not expire." Id. at 609. The Court, relying on 1998 statutory and regulatory changes which "consolidated the certificate and voucher programs in a new 42 U.S.C. 1437f(o)," id. at 611, noted that, although the federal regulations "continue to require an initial lease of one year . . ., gone are the provisions requiring automatic renewal." Id. at 612 . Indeed, there are new provisions, the Court pointed out, "requiring the lease to conform with standard leases in the community and with State landlord-tenant law." Id. Accordingly, the Court concluded: Whether the pre-1998 version of 1437f, and the regulations implementing it would have gone further and supported the notion of an indefinite tenancy is a moot point now, as the provisions in the old law that may have supported that proposition have been deleted in favor of the requirement that voucher program leases be consistent with leases generally used in the community, leases, like the one in this case, that ordinarily carry fixed expiration dates and permit eviction under the State tenant holding over law. The new, current, provisions clearly militate against the notion of an indefinite tenancy--a never ending lease. Id. at 612. In Carter v. Md. Mgmt. Co., the landlord participated in the Federal Low Income Housing Tax Credit Program and the tenant received housing assistance under the Voucher Program. Carter, 377 Md. at 598. At issue was whether the landlord could use the Maryland tenant holding over statute to evict the tenant. Id. Carter argued that under the Low Income Housing Tax Credit Program, a landlord could not terminate a tenancy without good cause, so she had a right to continued occupancy and her "fixed-term lease" was converted "into an indefinite one." Id. at 608-609. The Court rejected her argument, reasoning: At one time, the law may have supported petitioner's view of an indefinite lease. Prior to the consolidation of the certificate and voucher programs in a new 1437f(o) in 1998, the leasing provisions governing those programs were contained in 1437f(d)(1)(B), which provided, in relevant part, that (1) the lease between owner and tenant had to be for at least one year "and shall contain other terms and conditions specified by the Secretary," and (2) the owner could not "terminate the tenancy except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable Federal, State, or local law, or for other good cause." Section 1437f(d)(1)(B)(iii) through (v) listed certain conduct that would be cause for termination. In 1995, the Secretary adopted new regulations for the certificate and voucher programs. See 60 FR 34660 (July 3, 1995) adopting new 24 C.F.R. 982.309. Those regulations required the lease to be for an initial term of at least one year and to provide either "for automatic renewal for successive definite terms (e.g., month-to-month or year-to-year); or . . . for automatic indefinite extension of the lease term." 982.309(b)(1) and (2). It provided that the term of the lease would terminate if the owner, the tenant, or the two together terminated the lease, but stated that, during the term of the lease, the owner could not terminate the lease except for good cause. 982.309(b)(3), 982.310(a). In proposing those regulations, the Department noted that they were intended merely to "confirm and clarify" the existing principle that "the tenancy continues automatically after the end of the initial lease term" and that "there is no need or requirement for the parties to execute a new lease or lease extension" as "the automatic extension is provided for in the lease originally executed by the landlord and family." 58 FR 11292 (Feb. 24, 1993) We intimated as much, although the issue was not directly before us, in Carroll v. Housing Opportunities Comm'n, 306 Md. 515, 510 A.2d 540 (1986). The issue there was whether a 8 tenant, who challenged a tenant-holding-over action, had sufficiently alleged a controversy involving more than $500 to entitle her to a jury trial. Noting the good cause requirement in the Federal regulations, we concluded that she "has a right to remain in her townhouse indefinitely until the Commission can establish good cause for eviction" and that that right of continued tenancy, coupled with the rent subsidy, caused the value of the controversy to exceed $500. Id. at 525. The statutory and regulatory regime changed significantly in 1998, however, when Congress consolidated the certificate and voucher programs in a new 1437f(o). In place of the lease requirements of 1437f(d), the new programs became subject to 1437f(o)(7) which, after requiring a one-year initial lease (unless the public housing agency approves a shorter term), provides that the lease shall (1) be "in a standard form used in the locality by the dwelling unit owner," (2) "contain terms and conditions that--(I) are consistent with State and local law; and (II) apply generally to tenants in the property who are not assisted under this section," and (3) "provide that during the term of the lease, the owner shall not terminate the tenancy except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable Federal, State, or local law, or for other good cause." . See P.L. 105-276, 112 Stat. 2461, 2599. Those are the current provisions. In conformance with that statutory change, the applicable regulations were also significantly rewritten. See 64 FR 26632 (May 14, 1999). They continue to require an initial lease of one year, unless the public housing agency approves a shorter term, but gone are the provisions requiring automatic renewal. (Id. at 609-12.) Recognizing that a showing of good cause remained necessary not to renew such leases, the Carter Court explained that while the changes in the Voucher Program were certainly intended to allow landlords more flexibility and to bring some aspects of the voucher program more in line with both private residential leasing practices and with State landlord-tenant law, we do not believe that they were intended to subject voucher tenants to the arbitrary whims of landlords who are reaping a significant tax advantage from the program. If we were to conclude that the good cause requirement applies only to mid-term evictions and not to renewal decisions, the program would lose substantial stability, as tenants could be evicted for no reason at the end of a one-year lease or at any time thereafter on 60 days notice. That would hardly be consistent with the declared Congressional purpose of "aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing." Id. at 613 (citing 42 U.S.C. 1437f(a)). The Court concluded that although a participating landlord cannot evict a voucher program tenant without good cause, that neither the tax credit program nor the voucher program precluded the use of the tenant holding over statute to remove a tenant who is holding over after expiration of a lease term. See id. at 614. To succeed in such an action, the landlord "must comply with terms and conditions of R.P. 8-402 and establish good cause for refusing to renew the tenancy." Id.